Referrals

Referrals as a recruitment tool have many positive aspects. Research shows that 34% of employees got their job via a referral and also that people who have been referred are less costly to recruit and have higher engagement on average. The issue with referrals is that they mostly reinforce existing demographics within a company. Since most US companies lack racial and gender diversity that's representative of the US, referrals solidify the current lack of diversity. Some negative effects, however, can be overcome with some forethought [HBR]

Facts and data

White men are the most referred group. Researchers in 2017 asked approximately 53,000 U.S. workers how they came to apply to their current job and if they had landed their job based on an employee referral. Holding everything else constant, from job title to industry to location, female and minority applicants were much less likely to report receiving an employee referral than their white male counterparts. More specifically, white women were 12% less likely to receive a referral, men of color were 26% less likely and women of color were 35% less likely [Payscale]

Most white people in the US have entirely white networks. Polling company PRRI found that 75% of white people have "entirely white social networks without any minority presence." The same holds true for slightly less than two-thirds of Black Americans (that they have entirely same-race networks). This also means that while Black Americans have ten times as many black friends as white friends, white Americans have 91 times as many white friends as Black friends [Washington Post]

Don't be concerned about the legality of seeking referrals of people from underrepresented groups (be concerned about the opposite, actually). From the US EEOC (federal regulating body of employment discrimination): "It is also illegal for an employer to recruit new employees in a way that discriminates against them because of their race, color, religion, sex... For example, an employer's reliance on word-of-mouth recruitment by its mostly Hispanic work force may violate the law if the result is that almost all new hires are Hispanic" [EEOC]

40% of referrals are for white men though they are 34% of the population [Payscale]

Champions

We [at Pinterest] suspected that most people have probably worked with excellent candidates from underrepresented backgrounds... We hoped that if asked, people might think harder about qualified candidates that come from these backgrounds. We tested this hypothesis by prompting engineers to refer candidates from underrepresented backgrounds. We liked this idea in part because it engages the entire organization in taking ownership for our diversity efforts. To establish a baseline from which to measure, we looked at referrals over a six-week period. We then posed a challenge to the team to refer 10x more candidates from underrepresented ethnic backgrounds and 2x more women over the next six weeks. During the period of our challenge, we saw a 24 percent increase in the percent of women referred and a 55x increase in the percentage of candidates from underrepresented ethnic backgrounds. ~ Abby Maldonado, International HR Lead, EMEA at Pinterest (source)

Take Action

Encourage employees to diversify their networks and refer diverse candidates. Encouraging employees to diversify their personal networks fosters a more diverse pool of potential referrals. Explicitly asking for referrals of people from underrepresented backgrounds can prompt employees to think about the great people they’ve worked with who would add diversity to the team [Paradigm]

Gather data on recruiting and talent sourcing. Tracking your recruitment and talent channels. If, indeed, employee-referred candidates tend to be white men, determine how your other channels can attract more women and people of color. Take a close look at what percentage each channel accounts for in terms of your organization’s job candidates [HBR]

Restructure referral bonus programs to reward diverse referrals. If you’re already incentivizing employees to give referrals, consider giving larger bonuses for candidates who are currently underrepresented in your employee population. Intel is one organization that is doing just that by paying twice as much for diverse referrals [HBR]

Don’t give employee-referred candidates special treatment. Many organizations give referral candidates a leg up. They may not require them to jump through as many hoops from a hiring perspective. Since white men make up most referrals, if you're prioritizing them, you're probably making it harder for underrepresented candidates to get hired [HBR]